Oil gets much cheaper as compared to bottled water, In fact, while trading under thirty dollars per barrel, it is over 60 times cheaper than a bottle of Perrier sparkling water, which costs $1,850. Ultimately water from the ground that is filtered and processed into an attractive package driven by image could point to a solution for crude producers. Perhaps they should hire some talented PR firms to boost the “attractiveness” of oil.
Much of the drop was chalked up to technical reasons – the May delivery contract is close to expiring so its trading volume was light, which can exacerbate swings. But prices required for deliveries of the oil get cheaper, even further into the future, which was being seen in larger trading volumes, also plunged. Demand for oil has collapsed so much that facilities for storing crude are nearly full.
As reported by Chris Midgley, head of analytics at S&P Global Platts, the tanks could easily hit their limits within three weeks… Traders are willing to pay someone else to take that oil for delivery in May and shift the burden of figuring out where to keep it.
According to the oilfield engineering company, the pandemic has created so much significant turmoil in the industry that it “cannot reasonably estimate” how long the hit will last. A further decline in revenue and profitability for the rest of 2020, especially in North America is being feared.
The mild drops significantly ate into some of the big gains made since March, in the stock market. The rally has been called overdone by the pessimists, pointing to the severe economic pain, which is gradually sweeping the world and continued uncertainty about how long will the crisis last.
Crashing of the oil prices is a great opportunity for countries like Pakistan because even after passing 50% of the decline on to consumers, the government could make up for the revenue fall. The domestic gas will be expensive as compared to Qatri gas, The News reported on Tuesday.
The crash in oil prices on Monday was as disrupting as the pandemic, with the US oil prices plummeting to a range between $1-2 per barrel at the filing of this report.
The Brent oil prices also hovered around $22-25 per barrel, the lowest in 22 years. The glut created by the price war between Saudi Arabia and Russia was compounded by the extremely low oil demand in most developed economies.
The low oil prices would also give the government an opportunity to make up for huge revenue losses that it suffered before and after the pandemic. It would definitely pass on some of the benefits of this lower price to the consumers which would be enough to satisfy them. Even making life better
It could retain the balance by enhancing the petroleum levy and save at least Rs800 billion from this levy which would be Rs400 billion higher than the earnings the government earmarked from this item